Stocks inched lower, with the S&P 500 retreating slightly from a
record, as weakness in the energy and financial sectors outweighed gains
in technology shares.

Aided by rising incomes and tax refunds, Americans boosted spending
in April at the fastest clip since the end of 2016 and monthly
inflation rebounded but remained fairly low due to lower oil prices.
Personal income rose 0.4 percent in April, in line with expectations,
and consumer spending increased by 0.4 percent.

Americans spent far less
in the first three months of 2017, inducing the economy to slow to a
paltry 1.2% rate of growth. Although spending in March was revised up to
show a 0.3% increase instead of no change, outlays barely rose in the
first two months of the year.

The personal consumption expenditures
price index, the Federal Reserve’s preferred measure of inflation, rose
0.2 percent. The rate of inflation over the past 12 months slowed to
1.7% in April from a multiyear high of 2.1% in February. The core rate
of inflation dipped to a 1.5% pace from 1.6% in March.

The average credit score
nationwide hit 700 in April – the highest level since 2005 – according
to Fair Isaac, the creator of FICO credit scores. Meanwhile, the share
of consumers deemed to be riskiest, with a score below 600, hit a new
low of roughly 40M, or 20% of U.S. adults who have FICO scores.

Meanwhile, U.S. home prices rose 5.8 percent in March, according to the S&P/Case-Shiller
U.S. National Home Price Index. The gains were enough to reach a
33-month high, climbing at the strongest rate in nearly three years. The
inventory of homes for sale remains “unusually low.”

Prices are rising
across the country. Half of the 20 cities tracked by the S&P
Corelogic Case-Shiller rose more than 6% from March 2016 to March 2017.
The smallest gain of 4.1%, in New York, was roughly double the rate of
inflation. The index is based on a three-month average. For March,
Phoenix posted a 0.6% gain, with a 5.6% gain for the past 12 months.

And the consumer confidence
reading for May, came in at 117.9, slightly below a consensus estimate
of 119. Just three months earlier, consumer confidence hit its highest
level in more than 16 years, but heading into summer, the bloom is off
the rose.

An index that measures current economic conditions edged up to
140.7 from 140.3, but a gauge that looks out six months dipped to 102.6
from 105.4.

The economic data, while not overwhelming, still points to firming
domestic demand that could allow the Federal Reserve to raise interest
rates next month. Fed Governor Lael Brainard
said a hike is probably coming soon, though the central bank may want
to delay if inflation remains soft.

The Fed has also signaled it plans
later this year to begin shedding some of its $4.5 trillion in bond
holdings, most of which it amassed in the wake of the financial crisis
and recession. It would initially set a low cap on the securities
allowed to run off, and raise that every three months, under the plan.

Brainard largely agreed, saying the process should be set on “autopilot”
and be “calibrated” to the differences between maturing Treasury- and
mortgage-backed assets. She also suggested it would likely begin this
year, noting the process could be halted and even reversed if the U.S.
economy faced an “adverse shock.”

Dallas Fed head Robert Kaplan
told CNBC that while he was concerned about the recent economic data,
he expected two more rate hikes in 2017 and a start to the process of
unwinding the Fed’s $4.5 trillion bond portfolio, most of which was
accumulated after the financial crisis.

However, he doesn’t think that’s
because the economy is about to take off. Instead, Kaplan sees growth
likely continuing the path of about 2 percent and not the 3 percent
or more boom in gross domestic product that the administration has been
forecasting.

Fed Bank of St. Louis President James Bullard
said the path of inflation in the U.S. is “worrisome”, speaking in
Tokyo on Friday. The Fed’s plan for raising interest rates in the coming
years is also too aggressive. Bullard suggested the financial markets’
view of the upcoming rate hike trajectory is currently out of lockstep
with that of the Fed. Fed futures are currently pricing in around a 65
percent chance of a rate hike in June.

Amazon.com
became the second of the current S&P 500 components to hit the
$1,000 price mark. Priceline was the first S&P 500 stock to hit
$1,000, doing so in September 2013. Alphabet’s Class A shares were close
behind, hitting a record of $997.62 before ending the session up 0.3
percent at $996.17.

Shares of Amazon have risen 33 percent so far in
2017 alone, adding roughly $120 billion to its market value. Among the
other four largest U.S. companies by market cap, Apple and Facebook
share prices have also risen nearly 33 percent this year while Alphabet
has gained 26 percent and Microsoft has added 13 percent.

The combined
market cap of the top five is near $3 trillion, or more than 13 percent
of the S&P 500 index stocks’ capitalization. Amazon, the only one of
the top five not in the technology sector, accounts for 17 percent of
the market cap of the S&P 500 consumer discretionary sector.

British Airways’ flights are back to their normal schedule, following
an IT glitch over the long weekend that saw thousands of people
stranded around the world. Explaining the disaster over the weekend, CEO Alex Cruz told the BBC: “There
was a power surge and there was a back-up system, which did not work at
that particular point in time.”

Customers are entitled to compensation
under EU law if their flights are delayed by at least 3 hours for
reasons within an airline’s control. So, this glitch will likely cost
British Airways about $130 million just in customer compensation.

Payless ShoeSource
is preparing to launch a second round of store closings, seeking court
approval to trim its retail business by closing up to 408 stores if
negotiations with landlords fail to result in rent concessions. The
latest closings would bring the total number of recently closed Payless
stores to nearly 800.

Payless is already in the process of closing
nearly 400 of its locations. The Kansas-based retailer had more than
4,000 stores, employing some 22,000 people, when it sought chapter 11
protection last month.

As traditional retail stores close
and vacancies mount, landlords across the country appear newly
receptive to leases as short as a week. The upswing in pop-up stores, as
the short-term placements are called, is playing out in all sorts of
ways, and in all sorts of places — including dark malls, former grocery
stores and shuttered art galleries, according to real estate brokers,
landlords and tenants.

The rise in pop-up stores is adding another
element of change to a retail industry facing upheaval from profound
shifts in consumer habits and powerful new competitors, especially
online. In the past, short-term tenants focused on holidays like
Halloween: Costumes were hot items in October, but sales evaporated once
the calendar turned to November.

For retailers, the stores can offer
lower rents and far less commitment. For the landlords, the reason is
just as clear: A short-term tenant is better than no tenant at all.

The Brazilian Supreme Court
has order President Michel Temer must respond within 24 hours to
federal police questions about his alleged involvement in a sprawling
political graft probe. Executives from the world’s biggest meatpacker
JBS SA said in plea-bargain testimony to police that Temer condoned
bribing a potential witness in the “Car Wash” corruption case and they
paid the president nearly $5 million in bribes in recent years.

Goldman Sachs has
confirmed it has bought $2.8 billion worth of bonds from Venezuela’s
central bank. According to the Wall Street Journal, Goldman paid just
$865 million for bonds valued at $2.8 billion – paying about 31 cents on
the dollar for the bonds. Venezuela is experiencing the worst
financial crisis in its history and has been rocked by months of violent
demonstrations that have led to at least 55 deaths.

Inflation has
soared past 400%, there are widespread shortages of essential supplies
including food and medicines, a quarter of the country is unemployed.
The bond sale will likely help finance the administration of the
embattled president Nicolas Maduro.

The Federal Reserve said it had fined Deutsche Bank
$41 million for failing to ensure its systems would detect money
laundering regulations and it said the lender agreed to increase its
controls. The New York Fed found that the German bank had faulty systems
to detect suspicious transactions between 2011 and 2015

The Supreme Court
today placed sharp limits on how much control patent holders have over
how their products are used after they are sold. The case concerned
Lexmark International, which makes toner cartridges for use in its
printers. The court ruled that the company could not use patent law to
stop companies from refilling and selling the cartridges.

Lexmark sold
the cartridges on the condition that they not be reused after the ink
ran out. Impression Products, a small company in West Virginia
nonetheless bought Lexmark cartridges in the United States and abroad,
refurbished and refilled them and sold them more cheaply than Lexmark
does.

Lexmark sued for patent infringement. Chief Justice John Roberts
wrote: “The purchaser and all subsequent owners are free to use or
resell the product just like any other item of personal property,
without fear of an infringement lawsuit.”

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